The 2018 Global Fraud and Identity Report
The 2018 Global Fraud and Identity Report
Exploring the links between customer recognition, convenience, trust and fraud risk
Introduction
Being recognised is a simple thing that goes a long way. Recognition takes many forms ? whether it's acknowledgement for an achievement or being welcomed in a room as a familiar face. It feels good to be recognised.
But there's more to recognition than feeling good. Now more than ever there's a commercial value associated with it. In an increasingly digital world, we are trying to recreate in-person recognition across industries and channels to fuel growth and opportunities. In doing this we need to carefully balance customer security and convenience with fraud and friction. Being able to verify someone shouldn't disrupt the way they interact with a business. Experian? believes that any business that can better identify its customers can more easily spot fraud.
Just how well-equipped are businesses at recognising their customers' identities online? What type of investments are they making in customer recognition and to what degree are they able to accurately identify customers and manage fraud risk? Our 2018 Global Fraud and Identity Report, based on input from more than 5,500 consumers and 500 businesses* worldwide, looks at this topic to understand what consumers think of security protocols today and gauges how confident businesses are in their ability to accurately identify their customers.
* Businesses in one of the following sectors: retail banking and credit card, digital only and click-n-mortar retailer, airline industry, consumer technology and electronics, telecommunications worldwide (Australia, Brazil, China, France, India, Singapore, South Africa, Spain, Turkey, the United Kingdom and the United States).
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Executive Summary
With most consumers owning smartphone and mobile devices (91 percent), followed closely by laptop computers (83 percent), the digital marketplace is here now (Figure 1). Certainly, technology is supporting the large volume of online interactions between businesses and consumers. But the real currency of digital commerce is trust.
Device ownership
91% 83%
Smartphone
Laptop
65%
Tablet
62%
PC
21%
Smartwatch
13%
Smarthome Device
Figure 1
Online activities among consumers reflect widespread embrace of digital commerce as a way to purchase goods and services (90 percent) and conduct personal banking (88 percent) (Figure 2).
As businesses undergo digital transformations in their front and back office operations, they recognise the importance of trust and the need for technology to enable it.
When it comes to online engagement, three-quarters (75 percent) of businesses are interested in more advanced security measures and authentication processes that have little or no impact on the customer. At the same time businesses understand that their customers take comfort in the security measures they already have in place for digital transactions.
75% of businesses want advanced
authentication and security measures that have little or no impact on the digital
customer experience.
Top activities on devices
Online Shopping Personal Banking Play Video Games Apply For Drivers' License Get Quotes/Buy Insurance Apply For Credit Cards/Loans File Taxes
90% 88% 51% 51% 49% 48% 45%
Building trust through technology without disruption is increasingly the goal, but also the responsibility of businesses with online channels. While there are genuine barriers to achieving that goal, it is now more critical than ever to business outcomes.
Figure 2
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Consumers expect businesses to protect them
The enthusiastic embrace by consumers of the digital marketplace is predicated on trust. Four out of five consumers trust that businesses are making the protection of their personal information a top priority (Figure 3).
63% of businesses have experienced the same or
more fraud losses in the past 12 months
4 out of 5 consumers trust that protecting personal data is a top
priority (banking)
Figure 3
In contrast, almost three-quarters of businesses (72 percent) cite fraud as a growing concern over the past 12 months (Figure 4) and nearly two-thirds (63 percent) report the same or higher levels of fraudulent losses over that same period (Figure 5).
Business executives share a growing concern about fraud over the past 12 months
27% 33%
30%
Slightly more The same amount Slightly less
Figure 5
63%
Nonetheless, consumers are feeling reassured. They cite visual signs of security and barriers they encounter when accessing their online accounts as indicators that a transaction is more secure. In fact, the lack of visible security was the number one reason customers abandoned a transaction (Figure 6).
Lack of visible security was the #1 reason customers abandoned a transaction
27% abandoned a transaction due to a lack of
visible security.
45%
27%
Significantly more Slightly more
Q: In the past 12 months, how has your concern about the risk of fraud changed, as it relates to your business?
Figure 4
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47%
Figure 6
53%
Other reasons transactions were abandoned include:
? Too much information required for new account setup
? Mandatory account creation for a one-time purchase
? Unclear reasons the site did not recognise me
Abandoned
Did not abandon
Nearly two-thirds (66 percent) of consumers surveyed appreciate security protocols when transacting online because it makes them feel protected (Figure 7). In some ways, consumers tolerate the nuisance of common barriers to accessing their accounts (e.g., forgetting their password or having to re-enter other security controls like CAPTCHA or PIN code) concluding that higher friction means better security.
66% of consumers said, "I like all the security
protocols when I interact online because it makes me
feel protected."
India
S. Africa
Australia
U.S
France
U.K
76%
74%
70%
69%
67%
66%
Spain
64%
Singapore
63%
Brazil
63%
China
62%
Turkey
56%
Overall
66%
Q: Please indicate how strongly you either agree or disagree [with each of the following statements] on the scale provided - disagree strongly, disagree, neither agree nor disagree, agree, strongly agree.
Figure 7
Consumer tolerance for friction for the sake of security varies across the 11 countries surveyed. For example, consumers in India and South Africa are more tolerant of security protocols because it makes them feel protected. On the other hand, consumers in Turkey are less tolerant.
Among these consumers, 42 percent were millennials compared to only 30 percent of those 35 and older. In other words, younger consumers are less tolerant of security hurdles and are more inclined to engage online if there was less friction.
So for businesses, there is a delicate balance to achieve. They need to deliver an online experience that instills confidence, with security protocols that make customers feel safe and protected. And, they need to allow for easy and convenient access.
Given the differences in tolerance for friction across different markets and age groups, a global one-size-fitsall solution is difficult to achieve. It is also a moving target, as consumers' tolerance for friction could lessen over time. Not to mention the expectations for a frictionless experience among future generations of digital customers used to an online digital experience that imposes few, if any, visible security protocols.
As security protocols transition to more data-driven, artificial-intelligence powered systems operating behind the scenes, businesses will need to gain and maintain the customer's trust without the familiar perception of security. Solutions that combine device information with other data points such as biometrics could help businesses in the future better recognise their customers rather than challenging them.
Tolerance also varies by age. One-third of consumers surveyed said they would do more transactions online if there weren't so many security hurdles to overcome.
42% of millennials said they would conduct more
online transactions if there weren't so many security
hurdles to overcome...
30% ...versus
among those 35 and older
"We're starting to look at what are the other ways biometrics could
be used. There is a world out there that is quickly evolving."
Strategist, retail banking, United States
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